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Launching a new business in Australia is an exciting step, but with opportunity comes an important set of legal and administrative decisions to get right from day one. For many aspiring business owners, one of the very first questions that comes up is: Do all businesses need an ABN in Australia?
The Australian Business Number (ABN) is one of the most widely used identifiers in our business landscape, showing up on everything from invoices to BAS statements. But the rules around when you actually need to get an ABN – whether you’re a sole trader, partnership, or company – aren’t always as clear-cut as you might hope.
In this guide, we’ll break down exactly what an ABN is, when you need it, who is required to have one, and what the Australian Business Number means for different business structures. We’ll also cover how to get your ABN, the legal implications, and what happens if you operate without one. Plus, you’ll find practical steps to set up your business the right way and avoid common mistakes.
If you’re thinking about starting or formalising your business, read on to learn how to meet Australia’s business registration and compliance requirements – and how Sprintlaw can help make the process smoother, so you can stay focused on building your venture.
What Is an ABN and Why Does It Matter?
An Australian Business Number (ABN) is a unique 11-digit identifier issued by the Australian Business Register (ABR), which is operated by the Australian Taxation Office (ATO). Your ABN is not just a number – it’s the foundation of your business’s legal identity.
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Why is the ABN important? Your ABN allows you to:
- Register for Goods and Services Tax (GST), PAYG withholding, and other taxes.
- Legitimately invoice customers and clients (businesses are legally required to show an ABN on invoices).
- Deal with other businesses and government agencies.
- Register a business name, open business banking accounts, and apply for business licences.
- What does a business ABN look like? It’s an 11-digit number that uniquely identifies your business. For example: 51 824 753 556.
Think of it as your official “business number Australia” that tells the world (and especially other businesses, the government, and tax authorities) you’re operating legitimately.
Do All Businesses Need an ABN?
The short answer: Most businesses in Australia need an ABN – but not every activity qualifies as a business, and not every individual needs an ABN.
The decision comes down to two factors:
- Are you carrying on an enterprise or business in Australia?
- Does your activity fit the ATO’s definition of a business?
If you’re earning income in a way that’s sufficiently organised, commercial, and ongoing, you’ll almost certainly need an ABN. But if you’re only doing a one-off gig or your activity is more of a hobby, you likely do not need one.
Who Needs an ABN?
- Sole traders: If you operate your business as an individual.
- Partnerships: If you and one or more partners are in business together.
- Companies: If your business is run through a separate legal entity registered with ASIC (the Australian Securities & Investments Commission).
- Trusts: If you’re carrying on a business as a trust.
In each case, the ABN for business is obtained by the entity carrying on the business.
When Do You Need an ABN?
You must have an ABN if you are:
- Running a business or enterprise in Australia (selling goods or services regularly, with the intention of making a profit).
- Registering for GST (required if your turnover is $75,000 or more).
- Issuing tax invoices to other businesses or customers.
- Applying for certain licences, permits, and government contracts.
- Importing or exporting goods as a business.
If you’re just selling second-hand items on Gumtree, selling at the odd market for fun, or occasionally doing a gig, you’re likely considered a hobbyist and do not need an ABN.
For more on the difference between a business and hobby, see our guide.
Business Structures and the ABN: Sole Trader, Partnership, Company, or Trust?
The process for obtaining an ABN depends on your business structure:
- Sole Trader: You apply for an individual ABN number in your own name.
- Partnership: The partnership (not the individual partners) applies for the ABN.
- Company: The company must be registered with ASIC first and then applies for an ABN company number. Your ACN (Australian Company Number) is separate from your ABN.
- Trust: The trustee applies for an ABN on behalf of the trust.
It’s worth taking some time to choose the right business structure, as this affects your legal and tax responsibilities, including how your ABN is used and displayed.
What About Companies? Does a Registered Company Need an ABN?
Yes, companies in Australia need an ABN. While every company registered with ASIC receives an ACN, you’ll also need to apply to the Australian Business Register for an ABN if you want to do business (issue invoices, register for GST, etc.).
Remember, a company ABN is different from an ACN. ACN is the number given by ASIC when you register a company. The ABN is used for business tax and identification purposes with customers and government bodies.
You can read more about the difference between an ABN and an ACN here.
Can an Individual Have an ABN Without a Business?
A common question is whether you can get an individual ABN without running a business. The answer is generally no. You need to be starting or carrying on an enterprise (business) that meets the ATO’s criteria.
If you try to get an ABN but your activity is more of a hobby, your application may be refused or your ABN may be cancelled later.
If you want to check your specific circumstances, it’s wise to speak with a legal expert or reach out to the ATO’s Australian Business Register directly.
What Happens If You Operate a Business Without an ABN?
It’s not illegal to operate a small business without an ABN if you’re genuinely a hobbyist or your activities fall short of running a business. However, most business activities do require an ABN. If you don’t get one when you should:
- Other businesses may be required to withhold 47% of payments to you because you haven’t supplied an ABN (called “No ABN withholding”).
- You can’t register for GST or claim tax credits.
- You may not be able to open business bank accounts, register for licences, or sign certain contracts.
- You may face issues with government tenders, grants, or compliance checks.
- Your business will look less credible to customers and suppliers.
If you’re serious about running a business and being paid properly, having an ABN is a must.
How Do I Get an ABN in Australia?
Getting an ABN is straightforward and free. Here’s a step-by-step overview:
- Decide on Your Business Structure. Will you operate as a sole trader, partnership, company, or trust?
- Apply Online at the Official Site. Go to the Australian Business Register (ABR) website. Only use the official site, as some third-party services may charge unnecessary fees.
- Provide Required Details. This includes details about you, your business activity, structure, and address.
- Receive Your ABN. Most applications are processed immediately, but if extra information is required it might take longer.
- Register for GST (if needed). If your turnover will exceed $75,000, you must register for GST at this point.
Your ABN will then appear on the Australian Business Number Register, which is searchable by the public and other businesses.
How To Find or Check an ABN Number in Australia
If you need to check someone’s ABN (for example, before doing business with them or verifying a supplier), you can search for their details for free at the Australian Business Register search tool.
What About Changing or Adding a New Business?
If you start a second business under the same structure (for example, open another business as a sole trader), you usually do not need a new ABN – just update your existing ABN details via the ABR.
However, if you change your business structure (from sole trader to company), you do need a new ABN for the new entity. ABNs are tied to the entity, not the person. For more, see changing company ownership.
Where Does ASIC Fit In With ABNs?
ASIC is the regulator for companies and business names in Australia. You may see references to:
- ASIC ABN register: This is often used colloquially but refers to the ABR (the actual register of ABNs, managed by the ATO, not ASIC).
- Business name registration: You must have an ABN before you can register a business name with ASIC.
While ASIC doesn’t issue ABNs, you’ll need your ABN throughout your dealings with ASIC – such as registering your business name or updating company records.
What Legal Documents and Registrations Will I Need?
Having an ABN is only the start. To run a compliant and successful business in Australia, you’ll often need several key legal documents and additional registrations, depending on your situation:
- Business Name Registration: Required if you trade under a name other than your own. See how to check and register a business name.
- GST Registration: Required if your turnover is $75,000 or more. Handled as part of your ABN application via the ABR.
- Customer Contracts and Terms & Conditions: Legally binding agreements between you and clients or customers outlining your services, payment, and responsibilities. Essential for protecting your interests – you can learn how to draft Terms & Conditions here.
- Privacy Policy: Required if you collect any personal information online or offline – see our privacy policy essentials guide.
- Employment Contracts: If hiring staff, you must provide legally compliant agreements.
- Supplier or Partnership Agreements: For working with other businesses or suppliers, these documents outline key terms and protect both parties.
Not sure which documents you need? Our legal document guide for businesses can help you build your legal toolkit.
What If You’re a Contractor or Freelancer – Do You Need an ABN?
If you’re providing services as a freelancer, contractor, or consultant and are not employed (that is, you invoice for your services, set your hours, or run your own separate business), you almost always need an ABN. Other businesses are required to withhold tax at the highest rate if you invoice them without one.
Common Questions About ABNs in Australia
- Can you run a business without an ABN? Only if you are genuinely operating as a hobbyist. Otherwise, you must have one.
- Can you have more than one ABN? Only if you run more than one legally separate entity (e.g. a sole trader and a company). Otherwise, use your existing ABN for new activities.
- Do you need an ABN before you start trading? It’s best practice to apply for and receive your ABN before you start issuing invoices or selling goods/services.
- How do you get an ABN number? Apply for an ABN through the ABR website or get help from a legal expert.
- How do you check the ABN business number of another company? Use the Australian Business Number Register to search for free.
Key Takeaways
- An ABN (Australian Business Number) is essential for almost all businesses and enterprises operating in Australia.
- You need an ABN if you’re running a business or enterprise – not just a hobby – even as a sole trader, partnership, company, or trust.
- Operating without an ABN exposes you to higher taxes, compliance issues, and a lack of business credibility.
- Each business structure has a different process and requirements for ABNs (sole traders vs. companies etc.).
- Getting an ABN is free and can be done quickly online through the official ABR.
- Having an ABN is just the start – ensure you’re covered with the right legal documents and registrations depending on your situation.
- For tailored legal advice and ongoing support, it’s wise to speak with knowledgeable lawyers before you start trading.
If you would like a consultation on starting a business the right way, including whether you need an ABN, business structure advice, or help registering and drafting your legal documents, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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